Who Will Win the Industrial Edge?

Companies like ExxonMobil are anticipating a 10X increase in computing devices in their plant operations in the coming years. This massive deployment of IT resources co-mingled with embedded OT systems is the very definition of the Industrial Edge.

Cloud giants like Amazon, Microsoft, and Google are lining up solutions to attract large industrial customers to their platform. They promise unlimited compute resources to solve data-driven challenges, yet require little or no IT management, no up-front capital expenditure, and little proprietary software/hardware. The cloud giants are blindingly fast innovators, creating tools like Kubernetes, AI/ML solutions, and endless compute/storage elasticity. As industrial companies like ExxonMobil, BASF, Merck, and Dupont deliberately move towards converged IT/OT implementations, the cloud platforms make adoption temptingly easy.

On the other side of the field are the traditional OT systems providers like Honeywell, Emerson, ABB, and Schneider Electric. These industry stalwarts have solved industrial operational challenges for decades with vertically integrated solutions that are reliable, expensive, and entirely proprietary (both hardware and software). A single implementation of their system will run in a refinery or processing facility for thirty years, virtually untouched. They deeply understand the needs, values, and perspective of the industrial users.

But the hegemony of the OT system vendors is about to break. Industrial users have enviously observed the flexibility and speed of other industries like telecommunications and cloud computing; this longing for similar vigor has set up the battleground for the Industrial Edge. Industry alliances like the Open Process AutomationTM Forum and Europe-focused NAMUR are breaking down the proprietary stacks of the traditional OT systems and opening the floodgates to innovators through open standards of interoperability.

My prediction on the winners of this incredible transformation is based on these observations:

1. Proprietary and vertically integrated solutions for the industrial edge are heading towards extinction, eventually. And it will be a long, slow death. The OT vendors have won the confidence of the industrial companies through decades of living together in the operational trenches. And in the conservative culture of industrial operators, that means transitioning away from those vendors will be slow.

2. Industrial users will not rely on cloud computing for operations-related workloads. You can probably blame Stuxnet (the virus) for this. Industrial operators are afraid of three things when it comes to cloud computing: security, latency, and lock-in. The security concern is, I think, self-explanatory. Low-latency is important because many processes, such as changing the position of a valve, require round-trip communications to the control-loop application measured in milliseconds. And not even Google can speed up light. And lastly, when data goes into the cloud, it rarely comes out. Endlessly paying cloud operators ever increasing fees for data storage is untenable for industrial companies.

3. The industrial edge = on-prem computing. Period. In addition to the points made in the previous paragraph, industrial users are very “physical-oriented.” They need to see it, touch it, control it. Industrial operators have a serious responsibility for what happens in their facility, on their watch. First, of course, because the repercussions from mistakes or mishaps in industrial operations have real-world safety consequences. But also, because any problems in operations have very significant impact on profitability and competitiveness in industries that have low profit margins. There is little appetite to rely on systems that are not immediately accessible and serviceable.

4. The biggest barriers for any IT vendors in the industrial edge are differences in: language, culture, and risk-tolerance. My last point is perhaps the biggest hurdle IT vendors must overcome to win big in the industrial edge market. Terms like application, container, and orchestration have wildly different meanings and connotations to industrial operators than their IT counterparts. This is not ignorance, it is culture. OT systems are meant to keep planes in the air, trains on the tracks, and explosive liquids safe in their enclosures. IT systems are meant to keep planes on-time, trains fully loaded, and explosive liquids tracked and accounted for with absolute precision. See the difference? Industrial operators are orders of magnitude more cautious and safety-minded than IT vendors. The language, culture, and tolerance for risk are just the tip of the iceberg when it comes to bridging the gap between IT and OT.

Conclusion: My prediction is that we are headed for a hybrid IT/OT world at the industrial edge. But OT systems vendors who adapt to open systems and innovate quickly will be in the driver seat. IT vendors who patiently work to understand the industrial operators’ goals, boundaries, and incentives will be richly rewarded by the “10X” increase in computing resources coming to the industrial edge.

Brandon Williams is CoFounder of Silicon Valley software company, CPLANE.ai. He is a daily innovator and practitioner of IT/OT convergence using orchestration. Brandon is a former U.S. nuclear submarine officer and holds an MBA in Operations and Finance from the Wharton School of the University of Pennsylvania. www.cplaneai.com

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